Homer Alaska - Business

Story last updated at
11:53 AM on
Wednesday, December 7, 2011

Jobless insurance rates going up

By Pat Forgey
Morris News Service - Alaska

JUNEAU  Alaska's businesses were being notified this week they're being hit with an increase in unemployment insurance rates, even while the state's unemployment rate itself is dropping and the unemployment insurance trust fund holds $234 million.

"It is ludicrous to require Alaskans to pay more for unemployment insurance when the UI fund is clearly solvent," said Gov. Sean Parnell Monday as he proposed new legislation to make a reduction possible.

The governor said the laws governing the unemployment insurance program requiring both additional payments into the trust fund and rate increases next year need revision.

The increase is estimated to cost Alaska employers and employees an additional $68 million in 2012, according to the Department of Labor and Workforce Development.

The rates vary among employers and industry, based on the likelihood of benefits being paid.

Parnell said Monday that he's directed Attorney General John Burns and Department of Labor Commissioner Click Bishop to recommend changes to the law that will allow reduced payments into the fund as long as it remains solvent.

That will take new action by the Alaska Legislature, he said.

Sen. Dennis Egan, D-Juneau, called next year's scheduled rate increase "crazy," and said the Legislature would likely be receptive to changes to keep it from happening.

"To have to contribute more money when we have a surplus trust balance doesn't make any sense to me," said Egan, who chairs the Senate's Labor and Commerce Committee, where any such legislation would likely be referred.

The Department of Labor on Friday and Monday mailed out unemployment insurance premium information for next year to business owners notifying them of the increase, said Beth Leschper, spokeswoman for the department.

Parnell is sending business owners a letter they should get in the next day or two that will inform them of his intent for changes to limit the rate impact, said Sharon Leighow, Parnell's press secretary.

"I intend to ask legislators to join me in providing payroll tax relief to employers and employees in the state," Parnell tells business owners in the letter.

The current unemployment insurance law, he said, provides the state with no flexibility and mandates the state "pile on" with additional costs at a time when people are already struggling to make ends meet.

While many states' unemployment insurance trust funds are struggling or bankrupt, with California and Michigan particularly hard hit, Alaska's is maintaining a surplus, according to the Department of Labor.

One reason may be that while unemployment has risen in recent years in Alaska along with the nation, it has risen much less here than elsewhere. At the same time, employment in the state hit a new record of 355,000 this year, even as most other states saw declines.